7 Tax Deductions Business Owners Think Are Legal But Aren't
December 3rd, 2025 | 6 min. read
By Matt Patrick
Have you ever heard that buying a truck can save you money on taxes? Or that wrapping your company logo on your car makes it 100% deductible? Maybe you even heard that the trip you took to the beach counts as business research because you thought about expanding there.
Are those deductions really legal, or are they tax traps waiting to happen?
Unfortunately, many of these commonly shared deductions don’t work the way business owners think they do.
After 20+ years of working with small business owners at Patrick Accounting, we've seen every creative deduction attempt imaginable. Most business owners aren't trying to cheat the system; they're just confused about where the line is.
In this article, you'll learn seven write-offs that sound legitimate but often aren't, and what you can safely deduct instead. If you're a business owner trying to keep more of what you earn without crossing the IRS line, this guide is for you.
1. Business Travel Write-Offs That Are Really Personal Vacations
When Your "Business Trip" Is Really Just Spring Break With Your Laptop
The misconception: As long as you do some work on a trip, the whole thing is deductible.
Why it doesn't work: The IRS requires the primary purpose to be business. If you take a seven-day trip and only two out of seven days are business-related, you can only deduct two-sevenths of your travel costs.
Here's the scenario: A business owner takes spring break to the beach and claims "research." Year one might be legitimate if you met with vendors or studied the market. Year five of the same trip with no expansion? That's a vacation you're just trying to write off.
What you CAN deduct:
- Legitimate research trips where you're visiting concepts or meeting vendors
- Travel to meet clients or attend conferences
- Business days within a longer trip, properly allocated
The key question: “Is this really a business trip?" If you're working hard to justify it, you already know the answer.
2. Entertainment Expenses (Goodbye, Client Tickets)
Why Your Master’s Tickets Aren't a Tax Write-Off Anymore
What changed: Entertainment used to be 50% deductible. So, if you spent $1,000 on event tickets or golf outings to entertain clients, you could write off $500. That changed in 2018, when new tax laws made entertainment 100% non-deductible. This was largely a political decision to put an end to the "wining and dining" days (and to offset other tax changes).
If you take clients to the Masters, your travel and meal expenses might be partially deductible, but the ticket itself is not.
The rule now:
- Tickets to sporting events: Not deductible
- Country club dues: Not deductible
- Golf outings: Not deductible
The meals exception: Taking a client to dinner is still 50% deductible if you're having a business conversation. The meal is deductible; entertainment after isn't.
For example, if you take clients to the Master’s, your travel and meal expenses might be partially deductible, but the ticket itself is not.
What you CAN still deduct:
- 50% of business meals where business is discussed
- Company holiday parties and team meals (different rules for employee events)
The bottom line: Entertainment is out. Meals with business purpose are in (at 50%).
3. Your Personal Vehicle With a Company Sticker
No, Wrapping Your Car in a Logo Doesn't Make It 100% Deductible
You’ve probably seen the TikTok tip: Put your logo on your car and write off 100% of it!
The reality: You're limited to actual business use percentage.
Two ways to deduct your vehicle:
- Mileage method: Track business miles and multiply by the current IRS rate
- Actual expenses method: Deduct gas, maintenance, insurance, and depreciation × business use percentage
What counts as business miles:
- Job-to-job, client-to-client driving
- Business errands (bank, post office, supplies)
- NOT your daily commute
Here are some real numbers: If you drive 10,000 total miles and 4,000 are business, you only deduct 40% of vehicle expenses. It doesn't matter if it's a $100,000 Lexus or $30,000 Focus, the mileage rate is the same.
The vehicle wrap deduction: You CAN deduct the wrap cost as advertising. But it doesn't change your mileage calculation. You're not driving a "mobile billboard" that's 100% deductible. You still only deduct actual business miles.
Documentation: You need to make sure you track every business trip with a mileage app like MileIQ.
4. Clothing and Uniforms, Unless You're a Plumber
Why Most Work Clothes Aren’t Deductible, Even If You Only Wear Them at Work
The rule: Clothing must be required for work AND not suitable for everyday wear.
What qualifies:
- Uniforms with company logos
- Safety equipment (steel-toed boots, hard hats, protective gear)
- Specialized work clothing you wouldn't normally wear outside of work
What doesn't qualify:
- Business suits, even if you only wear them to work
- "Professional" clothing that could be worn in normal life
- Dry cleaning for regular business attire
There's one exception: actors, performers, and other professionals required to wear specific costumes or stage clothing. But if you're wearing khakis and a polo to the office, that's not deductible, even if your boss requires business casual.
5. Home Office Deductions (When You Actually Work from Your Dining Table)
Why Most Home Offices Don’t Qualify for the Deduction
The requirements:
- Regular AND exclusive use for business
- Must be your principal place of business OR where you meet clients
Why most don't qualify: Using your dining table part-time doesn't count. If you work from your actual office most days, you're disqualified. The space must be used regularly and exclusively for business, not "sometimes for business, sometimes as a guest room."
What you CAN deduct if qualified:
- Percentage of rent/mortgage, utilities, insurance based on square footage
- Direct expenses like office furniture
The simplified option lets you skip tracking utilities and receipts and just multiply your square footage (max 300) by $5. But remember, the “regular and exclusive use” rule still applies.
6. Meals When There's No Business Being Discussed
Your Lunch Break Isn't a Tax Deduction
Current rule: Meals are only deductible (at 50%) when you’re actively discussing business with someone else.
What doesn't count:
- Your daily lunch, even if you're thinking about work
- Meals eaten alone
- Taking your spouse to dinner without a legitimate business reason
What DOES count:
- Client meals where you're discussing business
- Meals during business travel
- Meals with employees during business meetings or strategy sessions
Documentation you'll need:
- Who you met with
- The business purpose
- Receipt showing the amount
If you grab lunch by yourself between client meetings, that's a personal expense. If you take a client to lunch and discuss their project, you can deduct 50% of the bill.
7. Gifts to Clients: The $25 Limit You May Not Know About
Yes, You Heard That Correctly: $25 Per Client
This one surprises people. The maximum deduction for client gifts is $25 per person per year. Set in 1986, this has never been adjusted for inflation.
How it works:
- $100 gift basket to a client? Only $25 deductible.
- Multiple gifts to the same client during the year? Still capped at $25 total.
Why this exists: Without the $25 limit, people could disguise high-cost entertainment (like Master’s tickets) as “gifts.” The IRS saw that coming.
Your options:
- Give thoughtful gifts under $25 for full deduction
- Give larger gifts, knowing you're eating most of the cost
- Focus on meals (50% deductible) instead of gifts
Yes, $25 in 1986 equals about $70 today, but the IRS hasn't updated it.
BONUS: The Wildest Business Write-Off Attempts We've Actually Seen
After two decades in accounting, we've heard some creative justifications. Here are a few examples from real business owners:
- Plastic surgery for a trucking broker ("to help with professional appearances and win more deals")
- Horses ("We're going to make money on these")
- A boat for a Memphis plumbing company ("for client entertainment"… in landlocked Tennessee)
- Pet expenses for a golden retriever named Charlotte ("she's my security guard")
Look, we get it. You're trying to maximize deductions. But if you have to work that hard to justify something, it probably doesn't qualify.
The Line Between Smart Tax Planning and Trouble
We know that tax rules are confusing, and it feels like the IRS is constantly changing the game. Most business owners aren’t trying to cheat the system. You're just trying to keep more of what you earn.
But the line between smart tax planning and risky write-offs?
It comes down to one question:
Can you justify the deduction with a straight face?
If you’re working hard to convince yourself something qualifies, you probably know it doesn’t.
After 20+ years at Patrick Accounting, we know what’s legal and what gets people in trouble.
The best tax strategy isn’t writing off everything. It’s working with a proactive accountant who helps you plan year-round and claim deductions that actually qualify.
And that’s where most owners miss out. Not on loopholes, but on real, legal savings like:
- Retirement contributions
- Health insurance premiums
- Equipment purchases timed right
- Legit home office deductions
You don’t need to push the limits. You just need someone who knows the rules.
If you want to find out what you can (and can’t) deduct without losing sleep over an IRS audit, schedule a call with our team.
Because smart tax planning isn’t about bending the rules.
It’s about keeping more of what you earn… with clean books, clear decisions, and no surprises.
Want to keep learning? Here’s what to read next:
→ 10 Common Tax Mistakes Business Owners Make – Avoid the most expensive (and preventable) tax traps.
→ Year-End Tax Planning for Service Businesses: October-December Guide – Learn how to make strategic decisions before the year ends.
→ The Expensive Truth About Only Using Your Accountant at Tax Time – Discover why reactive tax help can cost you more in the long run.
→ Do You Talk to Your Accountant About Your Purchases Before You Make Them? – How one simple habit can save you thousands every year.
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